Europe must build up its own IT industry and reduce its dependence on that of the US if it is to stay competitive, said SAP chairman and chief executive Henning Kagermann, in a keynote speech opening the CeBIT trade show in Hannover, Germany, on Wednesday evening.
The IT industry has the most potential to innovate, the fewest restrictions and the most impact on other industries, but the sector is dominated by the US and accounts for only 1.5 percent of Germany's gross national product, Kagermann said.
"For each Euro in the EU invested in major IT projects, some 75 cents flows into a market outside Germany today. This cannot be the way ahead for Europe," he warned.
The dynamics of the global economy also disproportionately benefit the US, he said. He cited a study from management consultancy firm McKinsey which found that when one dollar of value creation moves out of the US, $1.13 of new gross domestic product are created in its place; in Germany, when a euro of value creation moves abroad, only 79 cents of new GDP are created. "In the United States, jobs with little added value are quickly replaced by more productive ones," he said.
To push Europe ahead, the EU needs a focused programme of IT industry investment, concentrating on next-generation business IT, and on embedded systems, Kagermann argued.
Businesses are relying increasingly on innovation in their business processes, rather than their end products, to compete, he said, and new service-oriented software architectures are ideally suited to deliver this kind of innovation. "Very much like the automotive industry, we will have platforms that are the basis for many models. But our models will be so flexible that owners will be able to turn their convertibles into pickups themselves — depending on their current needs," he said.
As for embedded systems, these are now so pervasive that they're absolutely essential, yet have become practically invisible, Kagermann said. "We all benefit from the latest opportunities offered by information and communication technology, but we no longer notice it."
In the future 80 percent of the automotive industry's innovations will be due to IT, mostly enabled by embedded software, Kagermann said, quoting from a Spiegel Magazine survey of heads of research at large automotive companies. He added that Europeans and particularly Germans are well positioned to take the lead in embedded systems because they are used to dealing with the complexity of such systems.
"It's all about interdisciplinary thinking and development... These types of projects are complex by nature, but we have learned to handle complexity — and it is our strength," he said.
A PDF transcript of the speech is available from SAP's Web site.
For a look at the fun side of CeBIT, check out our CeBIT Digital Living special. Or visit ZDNet UK's CeBIT Toolkit for more enterprise technology stories and pictures from the show floor.
Talkback
A good start would be for the UK government to stop handing handing huge outsourcing contracts to companies like EDS.
Or is this more of Blair's follow-the-Bush policy?
sw patents will prevent that independence if they are allowed in Europe.
Putting aside the questionable nature of the procedural violations the EC carried out this week, the CIID would allow all US sw patents to be valid in Europe. U.S. portfolio companies have been patenting everything under the sun and moon including well established practices and even old Internet RFCs (requests for comment). Given the fact that it costs in the ballpark of four million USD to defeat an invalid patent most businesses *using computers* -- yes, using computers, not just developers -- will find it cheaper to just pay off the portfolio companies, at least in the short run. It may cost only 50 000 per year per license to pay patent fees, but as of a few years ago any company with a web presence is violating more than two dozen patents.
Its also the type of culture America is, they dream all day about money, talk and breathe it. Any time I see young Americans (of my age, 22) they are always spouting some rubbish about the biggest this, the most expensive that etc...
It's all they think about, sure many good things come from America but I do not want to see Europe turn into a smash and grab operation like the US.
Then compare not companies but countries, the Germans are very productive and efficient but when proccesses are exported into the UK our industry just doesn't get it.
America is a new country and Europe is set in its ways, I think we should have our own MIT and work with each other more, like on the EU website project but it'll have to be done fast as China will be heavily relied upon soon, and that'll be another head ache.
The earlier post about Software patents is essencially correct, I would further add that alternatives that are actively developed in Europe, such as linux now face the real possibility of being wiped out on their home turf by the likes of Microsoft et all.
I remember emailing my MP about this very issue, only to be fobbed off by lord Sainsbury saying how its all going to be ok... Well, everything that I've seen since tells me otherwise.
As for the EU council, well they've shown their true colours on this one - they are in the pockets of mr Gates, and our elected representitives are utterly powerless to stop them from going ahead in this madness. Congratulations chaps, you've sealed the fate of our IT sector in your efforts to line your pockets. You've utterly sunk it.